Since the average retail investor generally doesn't have direct access to private equity funds, they become a black box. So, what is private equity, and how can it affect you and your finances?
What Is Private Equity?Private equity is a channel of business and investing that exists as an alternative to dealing directly in publicly traded securities, such as buying stocks.
Private Equity Firms ExplainedPrivate equity firms operate on the primary goal of acquiring companies and using them to turn a profit, both for investment partners and for the firm itself.
Private Equity Firm vs. Private Equity FundA private equity firm aggregates assets; within it, a private equity fund is a specific pool for joint investments by the firm and partners.
How a Private Equity Fund Makes MoneyIn an ideal scenario, private equity makes money for three primary groups of stakeholders: the issuing firm, the limited partners, and the portfolio companies.